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Credit cards are a secure and convenient method of payment and one of the easiest ways to build credit. But if you don't currently have a job, you may wonder if it’s possible to get a credit card. The short answer? Yes. However, you will typically need to show some form of income in order to qualify. Read on to learn what kind of income counts when applying for a credit card, what you can do if you have no income, along with tips on how to apply for a credit card without a job.
How Credit Card Payments Work
When you apply for a credit card without a steady source of income, it’s important to understand how credit card payments work. Unlike using a debit card, when you make a purchase with a credit card, you are essentially using someone else’s money — temporarily. At the end of the statement period, you will get a bill. The card issuer will also set a deadline by which you have to make a payment.You can avoid ever paying interest by paying your entire statement balance by the payment due date. Or, you can choose to pay the minimum amount due and carry a balance over to the next statement period. You will incur interest charges on the balance you carry over.If you don’t pay anything — not even the minimum — by the payment due date, you will incur penalty fees and possible damage to your credit history, since card issuers typically report late payments to the consumer credit bureaus. You will also accrue interest on the entire balance.Since credit card interest rates tend to be steeper than other forms of borrowing, it’s always a good idea to pay off a balance on time and in full whenever possible.Recommended: How Credit Cards Work
Types of Income That Can Be Reported for Credit Card Applications
While having a job is not one of the requirements for getting a credit card, you generally do have to have some sort of income to show the card issuer that you will be able to make the required payments. This is thanks to the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, which requires credit card companies to consider an applicant’s “ability to pay” before approving them for a credit card or raising their spending limit. The idea is to protect consumers from running up debt they can’t afford to pay back. Fortunately, there are many types of income other than wages from a job that credit card issuers will consider when you apply for a credit card.
Household Income
The CARD Act specifies that credit card issuers can consider the income of a spouse or domestic partner for the purpose of repaying the loan, so long as the applicant has a reasonable expectation of access to this money. This rule allows non-working spouses and domestic partners to have access to credit in their own name.
Investment Income
If you earn profits from investments (such as stocks or real estate) or dividends from bonds, you can report this income on your credit card application. If this is your primary source of income, you’ll need to keep good records on earnings.
Retirement Income
Card issuers will look at distributions from a retirement account or payments from Social Security when determining your income.
Inheritance and Trust Funds
You can include payments from an inheritance or trust fund as part of your income in a credit card application.
Spousal and Child Support Payments
Spousal and child support payments are also eligible to be included as income on your credit card application.
Guide to Applying for a Credit Card Without a Job
Getting approved for a credit card typically depends on your income (along with other criteria such as your credit history and current debt load). However, you don’t have to be employed. And, in some cases, you don’t even have to have any income to qualify. Here is a list of options for getting a credit card when you don’t have a job.
Student Credit Card
Student credit cards are designed to help young people enrolled in a college or university build credit. As a result, you don’t have to have a credit history to qualify for one. You simply have to show that you are a student and that you have some income (you can include pay from a part-time job, scholarships, grants, and/or regular allowance money). If you already have a checking or savings account, and no history of overdrawing on your account, you may find that it’s easier to qualify for a credit card with that bank. Recommended: At What Age Can You Get a Credit Card?
Secured Credit Card
Secured credit cards work just like any other card, except that they require the payment of a refundable security deposit before an account can be opened. The amount of your deposit typically becomes the account’s credit limit. The deposit is only used in the event that the cardholder defaults, so you still have to make regular payments of at least the minimum amount. With a year of on-time payments, many of the best secured cards will allow users to upgrade to a standard, unsecured card and receive their deposit back.
Credit Card With Cosigner
While they can be hard to find these days, some card issuers will allow you to get a credit card without a job or other source of income if you can get a friend or family member with steady income to cosign the application. You will still be responsible for the payments. The cosigner is just a fallback should you become unable to do so.
Become an Authorized User on Someone’s Credit Card
One way to get a credit card without showing any type of income is to become an authorized credit card user on someone else’s card. You’ll get a card with your name on it that’s linked to their account. While they are responsible for making the payments, you can work out an agreement on what your spending limit will be and how you will make payments to them. It’s a good idea to stick with this plan to maintain a good relationship with the cardholder and make sure you don’t do anything to harm their credit. Since your name is now attached to their credit profile, any dinks on their credit could potentially affect your credit, as well.
Is Getting a Credit Card While Unemployed a Good Idea?
There are some risks involved in getting and using a credit card if you currently have limited income. Without a reliable source of cash, you could end up missing payments and running up a high balance you can’t afford to pay off. This can have long-term detrimental effects on your financial health, as well as your credit profile.However, if you’re applying for a credit card in order to build your credit, plan to use it responsibly, and have access to funds to pay it off in full each month, getting a credit card without a job can make sense.
The Takeaway
You might think it’s impossible to get a credit card if you are unemployed, but credit card issuers are willing to accept many types of non-employment income. That means that even if you don’t currently have a job, you don’t have to miss out on the convenience of having a credit card or the opportunity to build your credit.Curious about what types of credit cards you might qualify for? With Lantern by SoFi’s online marketplace, you can shop different types of cards (including credit-building cards) and compare multiple credit card offers all in one place and without making any commitment.
Frequently Asked Questions
Do credit card companies know if you are unemployed?
Does unemployment affect credit?
What is the minimum age to get approved for a credit card?
Can you get a credit card on benefits?
Photo credit: iStock/Nastasic
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About the Author
Jason Steele
Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
